Their
termination entitlements are in jeopardy because more than $3 million
was transferred from Dubai to Australia in the days before
administrators and receivers were brought in.

The
company's top three executives, who signed off on the money transfer,
then left Dubai on fears they may be detained.

On
May 20, as Hastie Group executives tried to negotiate a new deal with
their banking partners, Hastie International electronically
transferred 11 million dirhams - more than $3 million - from their
local bank in Dubai to ANZ Bank in Sydney.

The
transfer document shows the move was signed off by Hastie's regional
finance manager Nathan Davidson and Gary Allen, the regional human
resources manager.

It
is understood that the transfer was ordered by Hastie's head office
in Sydney because of the fragile nature of the company and rapidly
evaporating cash flow.

This
has left Hastie's head office in Dubai with little or no money to
cover the entitlements of around 1,500 workers, some of whom are
expatriate Australians.

There
is no suggestion of unlawful activity, however Mr Davidson and Mr
Allen left Dubai on Monday, when administrators were officially
appointed in Australia.

Another
top executive, Robert Kirkham, who has had a long history with
Hastie, also departed, because of the very real risk that once word
of the Hastie collapse hit, those managers faced the prospect of
being detained under strict laws in the United Arab Emirates about
the need to cover worker entitlements.

There
is a high personal risk for foreigners in the Middle East, especially
those whose business affairs turn sour, and this could be the case
with Hastie - there is no real consistency of laws in the UAE, for
example.

There
is no implication that the executives were fleeing, but they probably
had cause for concern.

'Delicate
situation'

It
is understood that more than 20 expatriate Australians have been left
stranded.

Some
are senior managers who have been working on large projects across
the UAE in Dubai and Abu Dhabi.

The
remaining workers comprise labourers from India, Pakistan, Kuwait and
the Philippines who are entitled by law to gratuities or termination
payments.

Clearly,
Hastie staff in the Middle East are in the dark, and big questions
are being asked about why the $3 million was transferred, where it
ended up, who authorised it and whether they will be called to
account.

Administrator
Ian Carson of PPB Advisory has confirmed the situation in Dubai, but
he says it is a "very delicate" situation.

Mr
Carson confirmed that the $3 million was transferred at the
instruction of Hastie's head office in Sydney and is now tied up as
part of a complex investigation.

"They
did a sweep under management instructions last week, and I think they
were going to transfer some funds back, and then because of the
appointment of receivers, the funds were frozen and they are now
subject to ... Australian corporations law, which will determine how
the priorities work in an insolvency administration," he said.

The
administrators say that because the company had so many subsidiaries,
money would flow between them regularly.

"Some
companies were short of money, some companies had surpluses, so the
norm with companies like this is to move the funds around," Mr
Carson said.

"I
think that management actually had intended and tried to transfer
some funds back, but before they could do that the receivers had been
appointed and the accounts were frozen, and so there is nothing that
then management could do."

Hastie
had to be sponsored to operate in the United Arab Emirates, and given
that the three Hastie executives who can authorise payments have left
the country, the sponsor now has a lot of influence.

The
sponsor is closely connected to a royal family of the UAE and sources
say that the sponsor is refusing to sign termination letters until
there is enough money to pay staff entitlements.

As
in Australia, there is the possibility that staff who have been stood
down may be taken on by other contractors to complete projects, but
that cannot happen until local staff are officially terminated and
paid out.

They
then have to apply for a new work visa in the UAE.

It
is a complex and delicate situation, and there is no guarantee that
any workers will receive their full entitlements

Australia
has had its worst month since the 2008 crisis on the basis of worries
about Greece and Spain.

This
is the first time that I have seen live coverage of the sort we are
seeing in British newspapers in Australia – which says a lot.

Australia: Markets
Live: Shares trim losses

Australian
shares pare early losses but the main share indexes post losses of
more than 7% - one of the worst months since the global
financial crisis erupted - as worries about Greece and Spain dim
investor confidence.

5.30pm:
And as promised: the evening
markets wrap.
Thanks for joining us through the day - and we'll be back at 9.30am
AEST tomorrow for more rolling coverage of the markets.

5.18pm:
One other noteworthy snippet:

Standard
& Poor’s Ratings
Services said today that it had lowered
its long-term rating to
'AA+' from 'AAA', on the state of South
Australia and
the state's financing arm, South Australian Government Financing
Authority. At the same time, we affirmed the 'A-1+' short-term
rating. The outlooks on
the ratings remain negative.

5.10pm:
We'll point to the closing markets wrap shortly. In the meantime,
here are some of the biggest movers for May among the top 100:

4.53pm:
‘‘Fear has definitely got the market around its little finger
today,’’ CMC Markets sales trader Ben Taylor said in a research
note.

ANZ
was down seven cents at $20.90, CBA fell 34 cents to $49.40 and
Westpac slipped 13 cents to $20.29.

NAB, which was trading
without a dividend on Thursday, posted the biggest declines among
stocks in the S&P/ASX50, dropping 5.63 per cent, or $1.34, to
$22.48.

Mr Taylor said the financial sector’s declines came
as Moody’s probed the strength of lenders mortgage insurance
providers.

‘‘Brokers
are also moving negative on the banks considering the lower growth
environment, potential for margin squeeze and the difficulty to
foresee a change in economic conditions,’’ Mr Taylor
said.

Market heavyweight BHP was down 20 cents at $31.97,
while Rio backpedalled 49 cents to $56.86.

4.32pm:
The dollar,
meanwhile, is holding at about 97.2 US cents. Here's more from
Bloomberg:

“Spain
is becoming a huge problem,” said Derek
Mumford,
a director in Sydney at Rochford Capital, a currency risk management
company. “A lot of money is going to be needed to bail them out."

"The
Aussie will inevitably be dragged down to a very important support
area at 94.50 to 95 US cents.” (Support is an area on a chart where
orders to buy may be clustered - Bloomberg adds, helpfully.)

4.20pm:
For the month, the ASX200 lost about 7.3% and the All Ords 7.5% -
their worst months since May 2010 when the European sovereign debt
crisis ignited. (To be the worst month since the GFC/September 2008,
the drop needed to be more than 7.8%, which it was tracking at
earlier in the day.)

Materials cut
their losses to end only 0.5% down (was almost 2% at one
point); financials lost
1.1% and energy 0.7%

4.13pm:
The All
Ords gave
up 14.9 per cent, or 0.4%, to 4133.8.

4.11pm:
And here we have it: the ASX200
share index lost
17.9 points for the day, or 0.4%, to 4076.3.

4.08pm:
Just about to get the closing numbers. Either way, we'll be looking
at a loss of about $100
billion in
market value for May. It's also the first losing month for 2012.

3.59pm:
Industrials, consumer staples, health care are among the sectors up
as we head for the closing bell and the numbers settle.

Meanwhile,
just taking a quick look ahead to tonight. Watch out for US
jobs claims overnight,
but also GDP
growth figures for
the first quarter - with 1.9% annual rate expected.

3.51pm:
The Aussie
dollar is
hovering at about 97.2 US cents - about half a US cent off its lows
for the day after the strong capex figures.

Meanwhile,
the yuan has
slumped against US the dollar, heading for its biggest monthly drop
on record, hit by a continuously strengthening US currency in global
markets and a conspicuous slowdown in China's
economic growth,
traders said.

The lack of a forceful US response to the 1%
fall in the yuan in May surprised market participants after years of
heavy pressure from the United States for the yuan to appreciate
versus the US dollar to help balance bilateral and global
trade, Reuters reports.

Many
currency players, who even a couple of months ago suspected yuan
depreciation would spark a US outcry, now appear to agree that weak
global market conditions have persuaded US politicians to accept the
trend.On
the other hand,
a sharply weakening yuan could harm China's economy by inciting
capital outflow, and the Chinese central bank has acted to control
the pace of yuan depreciation.

3.40pm:
Within about 20 points of breaking even for the day. Meanwhile, we
noted earlier that building
approvals fell
sharply in some states. Here's the top of a related item:

Bureaucratic
obstacles are
helping prop up Australia’s $4.5 trillion housing market and
neutralising the biggest risk to the country’s mortgage
bonds.While affordability measures such as household debt and
home cost-to-income multiples exceed peaks seen in the U.S., U.K. and
Spain, prices in Australia are showing signs of stabilising after
dropping 7.6 per cent from their November 2010 high. That’s because
there’s one missing ingredient for a property collapse:
oversupply.

Limited land availability, caps on density and
higher levies on developers along with scarce financing have driven
the median capital city price for houses and apartments to $462,500
and created a housing shortage that’s set to exceed 600,000
dwellings in 20 years. That’s reducing the likelihood of a price
rout, which Fitch Ratings analyst James Zanesi sees as the only
threat to mortgages in an otherwise stable economy.

“Australia
has had a decade of severe underbuilding,” said Matthew
Hassan,
senior economist at Westpac, Australia’s second-biggest lender with
$287 billion in housing loans. “Without the accumulated severe
shortage of stock, there wouldn’t be the substantial latent demand
for dwellings that has been a strong support for prices.”

Residential
building approvals declined 8.7% m/m in April, with both house and
flat/unit/townhouse approvals lower in the month (-12.2% and -1.7%
m/m, respectively). Total
residential approvals remain
24.1% lower in annual terms.

Several
states saw substantial falls in the month. New
South Wales dwelling
approvals were down
15.3% m/m, South
Australian approvals
were down
27.8% m/m
and Western
Australian approvals
collapsed (-46.7% m/m).

The
collapse in Western Australia appears particularly strange and is at
least partially attributable to the Building Act 2011, which came
into effect in Western Australia on 2 April.

Nonetheless,
the broad national trend decline in dwelling approvals over the past
year is clear, and should be of increasing concern to policy makers.

Does
seem a bit odd that the boom state should be a bust for housing
approvals - unless all the brickies, etc, have headed to the mines.

3.10pm:
Dow futures have turned (very) slightly higher, one indication of
improving confidence out there in investor land.

London
futures, though, are off about 0.3%.

3.02pm:
The market has quietly been paring its losses...so whether May is the
worst month since September 2008 - or just May 2010 - hangs in the
balance.

Gold
miners are now up about 0.9% and consumer staples. Material stocks
are down 0.9%, financials 1.5% and energy 1.2%

2.54pm:Also
along the lines, so to speak, of iron ore and the Pilbara:

Atlas
Iron,
Australia’s fastest-growing iron ore producer, is open to talks
with Fortescue Metals
Group to build a railroad in the Pilbara region that will allow
exports to meet demand in Asia, Bloomberg reports.

Atlas
welcomes a third partner as long as Atlas has room to haul its own
iron ore, David
Flanagan,
executive chairman of the Perth-based company, said today. Fortescue,
Australia’s third-biggest iron ore exporter, said May 3 it’s open
to talks with the smaller rival to co-operate on the
development.

Fortescue, doubling its main line to Port Hedland
as part of an $8.4 billion expansion to almost triple output, may
benefit from swapping rail and port capacity with Atlas, Macquarie
Group said in an April 27 report.

Macquarie estimates the
Atlas railway project may cost $1.5 billion. Atlas, which is seeking
to boost annual shipments to 46 million metric tons by 2017 from 6
million tons, tied up with QR National Ltd. to study building the
line to Port Hedland.

In a statement, Environment Minister Tony Burke said
the national environmental approval included 37 conditions,
including measures to protect dugongs and marine turtles, and to
ensure no whales are nearby during noisy work on a new jetty.

BHP,
the world's biggest miner, had been expected to make a final
investment decision on its outer harbour plan this year. The
investment is crucial if BHP is to double iron ore production to 440
million tonnes a year,
as planned.

That's something like 1.2 million tonnes a day.

2.35pm:Back
to the markets - an overview from Reuters:

Investors
fled from risk assets to US government
bonds, with the benchmark 10-year Treasury yield falling below 1.6
per cent in early Asian trade on Thursday, its
lowest in at least 60 years.
The 10-year Japanese government bond yield hit a nine-year low of
0.810 per cent.

Oil prices extended losses after falling more
than 3 per cent on Wednesday and copper hit 2012 lows.

"Investors
were already exposed to the problems in Spain, but what really
disturbed the market were oil prices and U.S. bond yields which broke
out of range to hit long-period lows," said Lee Seung-wook, an
analyst at Kiwoom Securities.

MSCI's broadest index of
Asia-Pacific shares outside Japan tumbled as much as 1.6 per cent to
trade a whisker above a 2012 low marked last week. At current levels,
the index is set to close the month down nearly 12 per cent, the
biggest monthly loss in eight months.

2.27pm:
Understandably, there's been a bit of focus on Fairfax
Media (publisher
of this blog, come what may) and the strike activity over plans to
shift 66 editorial jobs from Newcastle and Wollongong - to New
Zealand.

New
Corp,
meanwhile, has used today to reveal it has made three staff
from news.com.au redundant
as part of a company restructure.

Staff
were told today that a technology writer, news producer and picture
editor would receive redundancies.

2.11pm:Here's
the start of an interesting read from Reuters on an internet
contrarian:

Scott
Devitt has
long stood out for being cautious in a world of Internet bulls.

In
the more than 12 years that he has covered Internet companies as a
Wall Street analyst, Devitt has developed a measured approach to a
sector that often succumbs to hype.

Devitt, who replaced star
Internet analyst Mary Meeker at Morgan Stanley in 2010, was one of
the few analysts to cut his price target for Google in January after
the company's fourth-quarter earnings missed analyst expectations by
more than $US1 a share. In February Devitt downgraded Amazon to equal
weight from overweight, while the majority of analysts had a buy or
strong buy on the stock.

But those contrarian calls pale next
to the one he made just days before Facebook priced
its $US16 billion initial public offering. That one has become the
subject of industry debate, regulatory scrutiny and investor
lawsuits.

1.40pm: Legislation
to enable the sell-off of NSW’s power generators has passed through
parliament, after the state’s lower house backed Shooters Party
amendments to the privatisation laws.

MPs
in the Legislative Assembly on Thursday supported changes that had
been made to the bill in the upper house, which add power worker
protections such as guaranteed employment for two years and
maintenance of apprenticeships.

1.32pm:Moody’s
has downgraded the credit rating of nine Danish banks, citing the
impact of the rolling eurozone crisis on bank loan quality and on
their fund-raising ability.

The
nine, along with the Finnish subsidiary of one of the banks, saw
their ratings cut one to three notches, with one of them, DLR Kredit,
pushed three steps down into the junk-bond realm at Ba1.

1.28pm: Treasury
Boss Martin Parkinson says
he has sympathy for mining companies because the peak of the
resources boom has probably passed, though the pipeline for
investment still has some way to run.

1.15pm: An
interesting fact from the CAPEX report. Australian companies are
planning $173 billion of new investment in the 2012/13 financial
year, including $118.5 billion in the mining industry. Read
the full story here.

12.55pm:
Australia's performance is around about the middle of the region's.
Japan's indexes are down almost 2% particularly because the
rush into the yen won't
do much for that country's exports.

Hong
Kong's Hang Seng and Korea's Kospi are down about as much as
Australia's, while mainland China and Singapore's are down less than
1% or so.

12.45pm:
As of a few minutes ago, only nine of the top
50 shares were
higher. Here are the big movers:

12.35pm:
The Aussie
dollar has
picked up to be trading just above the 97 US-cent mark.

An
interesting move, though, can be seen in the interest
rate futures gauge
created by Credit Suisse.

The
market is now viewing the prospect of a 50
basis-point cut by
the Reserve
Bank on
June 5 as as 60%
chance. That's
up from about 30% at the start of today.

Also,
those investors now see the RBA's cash rate as falling about 150
basis points in
12 months' time.

If
realised, that would lower the cash rate to 2.25% -
a level well below the 3% level touched during the global financial
crisis.

If
the banks were to pass on that full amount (unlikely) and if oil
prices kept falling (possible) then average
households may
see their finances improve considerably. That's provided the jobless
rate doesn't move much, of course.

12.21pm:
To be clear, though, the numbers for the March quarter may come in at
the higher end of expectations, at least for capex spending but they
don't really tell us what has happened since.

We
may get a GDP growth pick up for the first three months of the year
but the gloom that has broken out since then will mean the
second-quarter GDP may come in quite a bit weaker.

12.18pm:
Here's a view on those economic numbers from Ben
Jarman,
economist, JPMorgan:

"The capex adds
a little bit more to the story of resumption in firm's expansion
plans. We got the construction data yesterday that was strong driven
by engineering work and the capex lines up with that," he said.

"So
for the first quarter GDP story, what we have in hand now is
three from three in
terms of strong numbers for capex, construction and retail sales. So
that is obviously a good story for the Q1 GDP.

"The
issue is the way that Europe is evolving, so it really comes to how
worrying the financial market backdrop is when RBA meets next week."

12.07pm:
Entering the afternoon, the ASX200 is down about 1.3% (and so, about
8.2% for May).

12.03pm: ABC
radio just
reporting, by the way, Hastie's
demise has left about 1500 workers in the Middle East stranded.
Apparently the workers are mostly from India, Pakistan and the
Philippines - and they are owed entitlements that they are now
uncertain of receiving.

About
30 of that total are ex-pat Australians, ABC says.

11.56am:
More on the eco numbers shortly, but this just in from another
retailer:

The
head of department store chain Myer
Holdings says
the company can beat its online retail
rivals by offering the best of worlds.

With Australian
shoppers increasingly buying online and taking advantage of the
strong Aussie dollar, retailers are suffering a slump. ('Strong
dollar' referring to its longer-term position rather than the past
month or so.)

Myer chief executive Bernie
Brookes told
the Annual Stockbrokers Conference in Melbourne that a new
‘‘omni-channel’’ service would enable customers to buy
online but collect and try on items in person.Myer
and David Jones both
make less than 1
per cent of
their earnings online whereas their global peers - such as Macy’s,
Marks and Spencer, and John Lewis - have far higher internet sales
volumes.

11.48am:
Another reasonably good number was private
sector credit growth,
which came in at 0.4% for April. Economists had been tipping a 0.3%
rise for the month. (Credit grew a revised 0.5% in March.)

From
a year earlier, private credit rose 3.8% - a bit better than the 3.6%
pace expected by economists.

11.45am:
One reason for the limited dollar movement is that private
capital expenditure for
the March quarter came in a bit better than expected.

Such
spending rose 6.1
per cent in
the quarter versus 4 per cent expected - a figure that should also
help boost March quarter GDP figures.

11.42am:
The dollar was
down a bit, at 96.86 US cents before gaining to just under 97 US
cents.

11.40am:
From a year earlier, building
approvals were
down a massive 24.1% (vs a revised 15.8% year-on-year decline in
March.)

11.38am:
Not very good eco numbers just landing.

Building
approvals for
April were down
8.7 per cent in
the month when economists had been tipping a 0.3 per cent rise.

11.26am:
And here's a view on the local market from Peter
Esho,
chief market analyst at City Index:

‘‘If the financials
can bounce off their lows and indicate that they’ve bottomed, then
I think the ASX 200 index will find very strong support at around
4000 to 4040 points,’’ he said.

11.20am:
Some March
private capital expenditure figures
out in 10 minutes and April
building approvals.
Stay tuned.

Meanwhile,
some downish news from overseas:

Japanese
industrial output rose
in April at a slower pace than expected, in a discouraging sign that
China's slowing economy and Europe's sovereign debt crisis will weigh
on Japan's recovery.

The 0.2 per cent increase in industrial
output was less than the median estimate for a 0.5 per cent increase,
trade ministry data showed, as some manufacturers curbed production
due to an increase in inventories - Reuters reports.

Manufacturers
said they expect output to decline in May and rebound in June, but
economists said the risks from Europe's debt crisis and a rising yen
are reason to be cautious about the pace of Japan's economic
recovery.

"Growth was weaker than expected, reflecting
sluggish demand for IT-related goods worldwide, particularly in
China," said Takeshi
Minami,
chief economist at Norinchukin Research Institute in Tokyo.

11.14am:
Here's a look at where the dollar's
trading over the past year...and how we're now at about the lowest
since November. (Chart from Bloomberg):

Moody’s has placed on review for possible
downgrades the insurance financial strength ratings of lenders
mortgage insurance provided by QBE
and Westpac.

The
agency also extended its review for possible downgrade of Genworth
Financial Mortgage Indemnity and Genworth Financial Mortgage
Insurance.

The main reasons for the review were the risks
posed by high house prices and debt levels in Australia and the
potential adverse effects from any structural shifts in the domestic
economy.

But
Moody’s said it
did not expect its
review of the mortgage insurance sector to
broadly affect its
ratings of Australian banks and building societies.10.51am:Shares
bouncing off their lows, but here's another market where investor
concerns are being registered:

Benchmark 10-year
yields fell
to a record and
dropped below 3 per cent for the first time before a report that may
show growth in building permits slowed in April.

“The
economy here is not strong outside of the mining sector and the
pressure is on for interest rates to come down.” said Derek
Mumford,
a director in Sydney at Rochford Capital, a currency risk management
company. Today’s data “is not really going to turn around the
major trend in the Aussie dollar, which is obviously to the
downside.”

10.42am:
One company in the news this morning is Pacific
Brands:

Chairman
of embattled clothing retailer Pacific Brands James
MacKenzie will
step down from his post in June.

The company on Thursday
announced that Mr MacKenzie would be replaced by non-executive
director and Nine Entertainment’s chairman, Peter Bush, on June
30.

10.35am:The
dollar is worth keeping an eye on. It's sunk to as low 96.8 US cents
in recent trade. Bloomberg is calling the drop the biggest this year
against the greenback...trouble is working out when the start point
is for that measure. (ie NY close or the local 5pm one).

In
any case, the arrow is one way, and we're looking at a loss for the
month of about 7 per cent in the Aussie dollar.

10.14am:
Among key stocks:David Jones is off about 1.8% to $2.21BHP is
down 65 cents, or 2% to $31.52

10.09am:
As you can see in the chart, the market is sinking.

That
1.1% early fall would make it worst month since September 2008 - but
we have a full day to go.

Anyway,
miners are down 1.9%, financials 1.4% and even gold 1.3%

9.59am:
And for May, among the biggest
drops so
far are:Toll 21%

Fortescue 14.2%Rio 13.6%ANZ 12.3%

9.57am:
Not surprisingly, BHP has been the biggest drag on the local market,
losing $3.38 so far in May to $32.17 before today. That slide alone
lopped almost 15%, or 45 points, off the ASX200 this month (the
index's loss is 302 points, prior to today's trading.)

9.54am:
Going into today, the ASX200 is down about 6.9% for May. Should it
fall 1% or more today, it will be the biggest drop in the index since
September 2008 - the month US investment bank Lehman Brothers
crashed.

9.49am:
Shares in David Jones closed at $2.25 yesterday after hitting a 2012
low of $2.16 last week, and will be among those watch.

Also,
hard to look past the 3.8 per cent fall in BHP's New York-listed
shares, nor Rio's 4.9 per cent drop overnight. Will have more on that
in a moment.

9.40am:
Yesterday we had a drop in retail sales in April, and now this from
David Jones:

Sales
at David Jones are continuing to fall with latest figures showing a
drop of about three per cent in the three months to April.

The
retailer says its figures came in at just under $400 million.

Chief
executive Paul Zahra hasn’t painted a better picture for the next
quarter either saying sales in the first few weeks of the fourth
quarter have followed the same trend.